What lies ahead in UK and international healthcare benefits
In the UK the healthcare benefits market is evolving fast
"Medical and technological advances mean that we’re living for longer but many more of us will live with chronic conditions than ever before."
"As a result, increasing numbers of employers are reporting demands for treatments beyond those traditionally included within their corporate medical schemes. The traditional medical insurance product we bought 20 odd years ago isn’t necessarily fit for purpose in the current climate.
The introduction of new and often expensive treatments presents a growing challenge to employers who want to provide modern healthcare benefits to their staff but in an affordable and compliant way. I believe it’s increasingly important for employers to review their healthcare benefits and ensure that they continue to meet the needs of today’s changing workforce.
I also expect wellbeing to feature more highly on the corporate agenda, with growing numbers of employers looking to incorporate a wellbeing strategy and benefits or services that support healthier staff. As more of us can expect to work for longer, employee wellbeing can no longer be overlooked. Healthy, active and engaged staff are more likely to be happier and more productive – a win-win for everyone."
Managing healthcare costs
"The challenge is that these can all come at a cost. In a tough economic climate, employers want to ensure that they strike the right balance between providing the right medical and wellbeing benefits and managing the cost of benefit provision.
Clearly, Insurance Premium Tax (IPT) is a key driver to costs. During the Autumn Statement in 2016, the government announced that they intend to increase Insurance Premium Tax from 10% up to 12%. I believe that we can also reasonably expect IPT to continue to increase over the coming years, probably to similar levels to those in Europe of around 20%.
We recommend that our clients consider more tax-efficient funding vehicles; the Medical Trust or Healthcare Trust. These types of arrangement can mitigate some of the Insurance Premium Tax liability and at 12% that is definitely worth considering," she says.
But what about internationally? Looking at the international healthcare benefits market, Teresa Wighton, head of international healthcare consulting, says 2016 resulted in unprecedented political change on a global scale.
"From Brexit to Trump, 2017 will be dominated by the decisions we made last year. And with such major events comes international uncertainty. I expect that over the next two years, we will experience a turbulent time," she says.
"Fluctuating exchange rates are benefitting the export market but conversely having a negative impact on imports. So companies who rely on overseas suppliers may see costs continue to rise as the pound weakens. I think we can expect to see increasing price pressure on the cost of employee benefits as companies look to control their cost bases. International medical insurance is no exception and is probably the most competitively priced it’s ever been.
We do not anticipate the need for international medical insurance to diminish. If anything, we expect that there will be more need to ensure people have appropriate insurance in place. It is unlikely that the reciprocal arrangements that the UK currently enjoys with many EU and some Commonwealth countries will remain in a post-Brexit world.
There is also uncertainty about what the UK’s trade deals will look like and whether movement of people will be more difficult. So, we may see a changing pattern around where international assignments take place. As trade deals emerge, we can expect a direct correlation to where talent may be deployed."
Changing healthcare legislation
"As more and more people move overseas, the burden on health care facilities has increased. Any state provision previously enjoyed in regions such as the Middle East and many parts of Europe has diminished. Many countries now insist on medical insurance being in place as a residency requirement and it is critical that compliant policies are in place to protect both the employer and employee.
Employers can come unstuck if they fail to comply with local rules and regulations. The UAE is by far the most stringent when it comes to health care legislation. There is a significant amount of information needed before medical cover can be put in place. There are also fines if employers do not provide insurance or if people have had a break in cover. We have seen instances recently where clients have received such fines and there is no option but to pay up."
This article was provided by Punter Southall Health & Protection.
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